2023 (9) TMI 1059 - AT - Central Excise

Refund claim - refund filed on the ground that supplies were against International Competitive Bidding and thus exempt - rejection for the reason that the project had two different units of 500 MW each whereas the exemption is applicable only to power projects of a capacity of 1000 MW. Benefit of exemption denied - project is not a mega project with more than 1000 MW power - Condition No.19 of the Notification No.06/2006 is not satisfied as the goods are not exempted, when imported, vide Notification No.21/2002-Cus as amended by Notification No.49/2009-Cus - appellant was not a party to the International Bidding and as a sub-contractor of the BHEL. Project in question is not a 1000MW project - HELD THAT - Joint Secretary, Ministry of Power, Government of India, vide certificate dated 16-12-2009, certified that it is a case of setting up of Power plant of Capacity of 1000 MW. This should put to rest the speculation that the impugned project is of capacity of 1000 MW and not two projects of 500 MW each - CBEC vide F. No. 354/2007/2011-TRU dated 06.07.2012 has clarified that FM s approval has been obtained for the issuance of suitable instructions to the Central Excise authorities based on clarification received from Ministry of Power in this case directing them to dispose of protective demand notices in the light of this clarification. Appellant not a sub-contractor - HELD THAT - The project authority certifies the requirement of procurement of Main Plant equipment and other items to be supplied and that the list of the Sub-Contractor along with items to be supplied with quantities shall be intimated later. It is not the case of the department that the appellant is not a sub-contractor. This Tribunal in the case of CST LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 2008 (2) TMI 755 - CESTAT, BANGALORE and CST LTD. VERSUS COMMISSIONER OF CUS. C. EX., HYDERABAD-I 2007 (6) TMI 369 - CESTAT, BANGALORE held that exemption is available to the sub-contractors also. Condition No.19 of Notification no.06/2006 is not satisfied since as per Notification No 21/2002-Cus as amended by Notification No.49/2009-Cus prescribes Customs Duty @2.5% - HELD THAT - The learned Commissioner has erred in looking at the Customs duty applicable to the project imports falling under CTH 9801 whereas the appellants have supplied castable refractory goods falling under Chapter 69 and 38 of Central Excise Tariff Act. To this extent, the findings of the Commissioner are erroneous. Moreover, Department has not also issued any show-cause notice to the similarly placed sub-contractor-suppliers involved in the same project. Once the Department has accepted nonpayment of duty for the previous and subsequent periods, it is not open for the Department to deny refund, if otherwise in order, for the short period during which the appellants have paid duty under mistaken notion of law.The Ld. Counsel also submits that the appellants are, alternatively eligible for exemption under Notification No.20/2002 as the goods were supplied to power projects. The impugned order is not sustainable and is liable to be set aside - Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the denial of exemption under Notification No.06/2006-CE for supply of goods against International Competitive Bidding, the applicability of exemption under Notification No.20/2002 for supply of goods to power projects, and the satisfaction of Condition No.19 of Notification No.06/2006.

Exemption under Notification No.06/2006-CE:
The appellant, a manufacturer of castable refractory goods, supplied goods to a thermal power station project and claimed exemption under Notification No.06/2006-CE. The Department issued a show cause notice proposing to reject the claim on the grounds that the project did not meet the capacity requirement for exemption. The appellant argued that the project was indeed of 1000 MW capacity, supported by certifications from the Ministry of Power and letters from BHEL. The Tribunal found that the project met the capacity criteria for exemption and that the appellant was eligible for the benefit under Notification No.06/2006-CE.

Applicability of Exemption under Notification No.20/2002:
The appellant also claimed exemption under Notification No.20/2002 for supplying goods to power projects. The Department contended that the Customs duty prescribed under Notification No.21/2002-Cus was not satisfied. However, the Tribunal noted that the Commissioner erred in applying the Customs duty provision to the appellant's goods falling under different chapters of the Central Excise Tariff Act. The Tribunal held that the Commissioner's findings were erroneous and that the appellant was eligible for exemption under Notification No.20/2002 for supplying goods to power projects.

Satisfaction of Condition No.19 of Notification No.06/2006:
The Department raised concerns regarding the satisfaction of Condition No.19 of Notification No.06/2006, arguing that the appellant did not meet the requirements for exemption. The Tribunal observed that the appellant had paid duty for a brief period under a mistaken notion of law and had filed a refund claim accordingly. The Tribunal found that the Department had accepted nonpayment of duty for previous and subsequent periods and had not objected to it. Therefore, the Tribunal concluded that the Department could not deny the refund for the short period during which the duty was paid in error. The Tribunal also noted that the appellant was alternatively eligible for exemption under Notification No.20/2002 for supplying goods to power projects. Consequently, the Tribunal set aside the impugned order and allowed the appeal.

*(Pronounced on 22/09/2023)*